Diversification has kept global trade strong, despite Trump’s tariffs and accelerated US-China decoupling.
One of the main ways in which the economic policies of the second Donald Trump administration have been felt worldwide has been the steep hike in tariffs (Gensler et al, 2025). The average legislated levy on goods imported to the United States rose from 2.5 percent in 2024 to 16.8 percent in mid-November 2025 (The Budget Lab, 2025). Effective tariff rates (revenue raised by duties on goods as a proportion of import value) are lower than the legislated rates and vary widely depending on the source of goods: 37.7 percent for China at the end of October 2025 and 8.6 percent for the European Union (below the overall effective average rate of 10.9 percent), while for some countries rates are still very low, such as the 0.7 percent effective rate on the Bahamas.
How has global trade adjusted to the US tariff hikes? Our new Global Trade Tracker monitors trade flows between major economic blocs: the US, EU, China, Japan, the United Kingdom and the rest of the world. This allows an assessment both of how trade with the US has changed and how trade between other economies has been reshaped. Our tracker is more up to date than other trade datasets, visualises the most relevant developments and monitors reporting discrepancies, for example, the difference between US-reported imports from China and China’s reported exports to the US. In this analysis, we set out some initial findings for the US, China and the EU. The charts shown here will be updated regularly.
Redirection of trade, not collapse
The impacts of the 2025 US tariff hikes are clearly visible in trade flows. A surge in US imports in March 2025 (up $83 billion, or 32 percent, over 12 months) shows firms frontloaded purchases before tariff increases took effect. Sharply rising import values were driven by higher imports from the EU (Figure 1, first tab).
Once tariffs took effect, the surge reversed. The subsequent drop in US imports was primarily driven by reduced imports from China, which fell by 45 percent in the 12 months to November 2025, signalling an accelerated decoupling between the world’s two largest economies. Part of this decline was offset by higher imports from other Asian countries, including Taiwan and Vietnam, indicating partial substitution or potential tariff circumvention. Imports from the EU were volatile after April. In November 2025, they were $5.4 billion (10 percent) below the value in November 2024, though Eurostat data suggests a larger decline of $6.3 billion (Figure 1, second tab). By November 2025, total US imports were about 4 percent below their level a year earlier.
Despite volatile and ultimately lower EU exports to the US after the March 2025 frontloading, overall EU exports grew year-on-year, as exports to other destinations (especially the UK, Norway, Switzerland, Türkiye and the rest of the world as a bloc; Figure 1, second tab) more than offset the reduction in exports to the US. Quarterly national accounts show EU goods export volumes at a record high in the third quarter of 2025, growing 3.6 percent in real terms compared to a year earlier. An interesting anomaly was a $1.6 billion (31 percent) jump in EU exports to the Bahamas in August 2025 compared to August 2024, while exports to the US in August 2025 were $8 billion on the August 2024 amount; this may be because of a temporary rerouting or changes in destination reporting.
China’s exports have also remained strong, with the substantial fall in exports to the US offset by stronger exports to ASEAN countries, the EU and other markets, resulting in overall year-on-year export growth of $22 billion (6.6 percent) by December 2025. This shift suggests that firms facing persistent trade barriers adjust production networks and logistics and redirect shipments to non-tariffed markets (Rotunno and Ruta, 2025; Kohlscheen et al, 2025). Earlier tariff episodes (notably 2018-2019) saw comparable patterns: China offsetting US market losses by expanding trade with Southeast Asia, Europe and Africa (Freund et al, 2023).
Contrasting trade balances
One major justification for Trump’s tariffs is to reduce the US trade deficit. While the deficit change little in most of 2025, in October 2025, it dropped below 3 percent of GDP (the lowest since at least 2010), though it returned above 3 percent of GDP in November (Figure 2). An export increase in October was driven largely by non-monetary gold exports (partly driven by rising gold prices) rather than by US-manufactured goods, which partially corrected in November, raising doubts about whether the higher US export level can be maintained. The import decline in October, meanwhile, was led by pharmaceuticals, possibly reflecting tariff effects. The US trade deficits with China and the EU have more than halved, but the deficits with Mexico and others have widened, reflecting trade re-routing.
The overall trade surpluses of the EU and China have remained remarkably stable (Figure 2), despite major shifts across partner countries. The EU and Chinese surpluses with the US fell significantly. The EU’s deficit with China widened after 2020, but declined marginally in 2025 – even though China reoriented its trade and surplus away from the US. The EU’s trade surplus with the rest of the world has expanded, partly offsetting losses from transatlantic trade. These developments again point to reorientation of exports to alternative destinations in response to US trade barriers.
The bulk of China’s trade surplus from 2015-2020 was achieved with the US and the EU, while its trade with other countries was broadly balanced (Figure 2), reflecting the deep integration of global supply chains. Since 2024, however, China’s surplus with other countries has expanded markedly, reaching over one-third of its total surplus in 2025.
Product trade reshuffling
US product-specific tariffs – 16 percent on automobiles, 27 percent on steel and 40 percent on aluminium by October 2025 – triggered varying adjustment patterns. The US automobile trade deficit widened as imports rose and sourcing shifted towards Mexico and other suppliers, even if bilateral balances with the EU, China, the United Kingdom and Japan improved. While Canada and Mexico under the United States-Mexico-Canada Agreement are partly exempt from some automobile parts tariffs, this seems to have positively affected only Mexico.
The US steel trade deficit has narrowed, driven by reduced import from most major trading partners and by steady exports (Figure 3, second tab). Increased domestic production of steel, replacing lower imports, suggests some reshoring success.
The aluminium trade deficit fluctuated during 2025, with the average May-November 2025 data indicating a slightly larger deficit than in most months of 2024 – despite the 40 percent effective tariff rate (Figure 3, third tab). The geographical reshuffling (reduced imports from the EU and China, increased imports from other countries, such as Taiwan) is also visible in US aluminium trade data.
Generally, the differing impacts of tariffs across product markets suggest that domestic production capacity, the possibility of alternative import sources and trade relations all play significant roles. Overall, product-level trade changes reflect broader reshuffling and continued US decoupling from China.
In contrast, EU product trade balances have been barely impacted. There has been a slight reduction in the automobile trade surplus (driven by a larger deficit with China, partly linked to electric vehicles imports, while EU automobile exports have hardly changed; see our detailed dataset), while the steel and aluminium trade surpluses have remained broadly unchanged. Overall, these developments point to the resilience of EU exports.
Trade-reporting discrepancies and data-quality concerns
Our analysis relies on data from the US Census Bureau, Eurostat and the General Administration of Customs of China. However, discrepancies between these sources create uncertainty about the true size of trade balances (Figure 4).
Some discrepancy is unsurprising because of differences in valuation methods, re-routing through third countries and fraud, typically leading to higher reported imports than partner-reported exports (Kee, 2024). If the US, for example, trades at a deficit with China, one would expect the deficit reported by the US to be larger than the surplus reported by China. Historically, this pattern has held for US-China, EU-China and EU-US trade.
However, the US- China discrepancy has reversed. In 2015 the US reported a trade deficit with China that was $106 billion larger than the trade surplus reported by China. By 2024, the trade deficit reported by the US was $66 billion lower than China’s surplus figure. The shift started around 2018, coinciding with the trade conflict between the two countries. Wolfe (2025) attributed the reversal to value-added-tax reform in China and increased tariff avoidance practices, such as country-of-origin re-labelling or price adjustments, which distort trade statistics.
In contrast, the EU-China discrepancy has remained unchanged (the EU reports a larger bilateral trade deficit than the surplus reported by China), while the much smaller EU-US reporting gaps had the expected discrepancy in 2015-2024 (a higher US reported deficit than the EU reported surplus), but this switched in 2025.
Monitoring these reporting discrepancies is essential, as US tariffs could further distort global trade statistics, making it even more difficult to understand the impact of tariffs.
Conclusions
Six main findings arise from our analysis of Global Trade Tracker monthly trade data:
- Stockpiling ahead of the implementation of Trump’s tariffs created temporary spikes in US imports and a record monthly US trade deficit in March 2025.
- Once the tariffs took effect, bilateral trade patterns adjusted quickly. US imports from China and US exports to China declined substantially, suggesting a decoupling between the two economies. In contrast, US trade with the EU showed milder adjustments (reduced US imports and increased US exports), suggesting a reshuffling, but not a decoupling, of transatlantic trade.
- Despite disruption of trade with the US, both the EU and China maintained broadly unchanged surpluses, supported by strong export performance through market diversification.
- The late‑2025 narrowing of the US trade deficit was driven partly by higher non-monetary gold exports, raising questions about how durable a narrower deficit will be.
- Larger product-specific tariffs do not always achieve their intended results. While the US steel trade deficit declined, the aluminium deficit changed little, and the automobile trade deficit even increased.
- Attempts by exporters and importers to circumvent tariffs might shift regular trade reporting discrepancy patterns and further obscure the impact of US tariffs on the global economy.
These outcomes suggest that both the EU and China have leveraged diversified export structures to mitigate the impact of US protectionism, as happened during the 2018-2019 US-China tariff conflicts (Freund et al, 2023; Rotunno and Ruta, 2025). Global supply chains have reorganised geographically. In this sense, global trade is fragmenting but not deglobalising.
Source : Bruegel
